Where would the European economy be today without Germany? Compared with all the other states in the European Union, Germany is the viable cash cow for the rest to milk, and that’s only because of the economic reforms that took place before the Great Recession hit.
It was the Social Democrats, led by Gerhard Schroder (in power from 1998-2005), who did what had to be done. His government lowered taxes, consolidated welfare programs and liberalized labor law enough to spare Germany the worst of the recession’s effects. Only a free economy can adapt to change, and Germany liberalized just enough to make the difference.
It was a case of “Nixon goes to China” — that is, a reform brought about by a source that was not expected. And because it was unexpected, it had a greater political chance for success. The policy turn defied expectations and created enough temporary upheaval to enable the rarest of things: a policy shift, however marginal, toward greater freedom.
When you think about it, this is how it usually happens. The Social Democrats liberalized the Canadian economy in the 1990s, and this spared the country the worst of the recession woes of today. Bill Clinton led the charge for a welfare reform that the Republicans wouldn’t have dared to put forward on their own. Jimmy Carter put trucking and airline deregulation in motion. Ronald Reagan, the supposed war hawk, was the first to propose full-scale and mutual disarmament to a Soviet leader.
There’s also the most-spectacular example of modern times in China: The Communist Party is what unleashed the capitalist revolution that transformed a whole nation with record economic growth. Lesser-known cases of similar change took place in New Zealand and Sweden, where social democrats pushed change and liberalization.
The opposite holds true too. The political left warned of both Bush presidencies that they would slash federal spending. Instead, they broke all records for spending expansions. Republicans have been consistently terrible in office on all the very things they claim from the stump to want to reform.
Looking at the reality, Republicans seem to be exceptionally good at regulating, taxing, spending and imposing new mandates — even as the Democrats accuse them of dismantling the New Deal. If only the Republicans would actually do what the Democrats accuse them of doing!
The political right says that Obama has slashed military spending and thereby endangered national security. Romney echoes this line in his stump speech. The actual budget numbers tell a different story. Obama has continued and extended the Bush war legacy in every way.
I can recall giving speeches in the late 1980s on Reagan’s domestic spending record, showing how his administration massively expanded spending in every area. I would point to the grim reality with actual numbers and then look out over a crowd of people who clearly didn’t believe me. I would put up charts, and they would assume they were fake.
In politics, up is down, left is right, black is white. Why is it that there is so little relationship between politics and reality? Talk is cheap, and politicians will say anything both before and after they are elected.
They have a vested interest in maintaining the legends about themselves that animate the settled political dramas of the political culture. Lacking any other basis on which to vote for this guy or that guy, voters have little choice but to believe them.
The No. 1 thing to remember about politics is that officeholders are mostly made of illusion. These people are not actually “running the country,” as the phrase goes. Neither the President nor the Congress has much to do with the actual day-to-day operations of the state.
The substance of the real state is what Frank Chodorov (in The Rise & Fall of Society, this week’s over-the-top amazing release in the Laissez Faire Club) calls the “aristocracy of office.”
He is speaking of the bureaucracy. Once the offices are established, they are perpetuated. It doesn’t matter that that excuse for their existence is long past. They are unaffected by elections, protests, editorials, political debate and political promises. They are gigantic and fearsome beasts who laugh at the politicians who claim to control them.
“Once a law enters the statute books, it is beyond the purview of those who made it, the legislators or the king, and becomes the special, private province of those who operate it. The more numerous and prolix the laws, the more important and the more self-sufficient are the operating specialists… The real governing body of the country is its practicing bureaucracy, whose prospects brighten with each reform that becomes law.”
The bureaucrats pay little attention to the newly elected administration. They have a new political appointee who ostensibly heads the agency, but he or she will be gone in a few years or maybe sooner, and the bureaucrats know this. Plus, the new guy is wholly dependent on the powers of the permanent bureaucracy, without which he has no information or power at all. All that a new presidential administration means to these people is that a new portrait appears on the wall. Nothing more.
Now, how about the perpetual fantasy that we will get the right guy in office who will slash spending, confound the bureaucracy, pull the troops out, cut taxes and even take on the Federal Reserve? I love this idea, but let’s look at what actually happens.
The idea of cutting government goes against the whole reason for government’s existence. A president who swears to cut government is like the new CEO of a company who swears to drive down the stock price and ruin the customer base of the company. The entire institution will, naturally, regard the impulse as dangerous and insane.
If a new president has sworn to take on the bureaucracy, the bureaucracies will be ready for battle. They won’t be caught off guard; on the contrary, they will have their guard up. It is like a challenge to their rule, and they will set out to show the political types just who the real boss is. And they have the advantage in this struggle. They are permanent. The politicians are temporary. They are not responsible to any member of the public; the politicians worry about the polls.
The new president also must, upon taking office, appoint some 6,000 people to political positions within the bureaucracy. That is among his first tasks. The appointees come from his donor base, his intellectual base and from the professional ranks of political hired hands that hang around Washington like flies around a landfill. The new appointees are socialized to the new culture within days, or else they face the price. Their loyalties change very quickly once faced with the sheer vastness, the power, the seeming prestige of the world of government.
Who is going to win this struggle? History gives the answer. There are very rare occasions when government is rolled back, and they present themselves in ways that are surprising and unexpected, and usually at the hands of people who seem like the least likely to cut government at all.
This is why politics often produce results that are the opposite of what we first expect.
There is no better guide — and I really mean no better guide — than Frank Chodorov’s Rise & Fall of Society. This man had a sophisticated grasp on the real nature of the beast, one that eludes practically everyone else and is especially lost on those who have been taught something different their entire lives.
I’m optimistic about the cause of freedom. I just don’t believe that it will be achieved through any conventional or expected route.